About color It's really a warm color, I love it.
However, in the original it seems to use the same yellow from the level for stealth purposes? (or at least Eggman originally designed it for this?)
Try extracting with the eyedropper tool the exact Yellow original color first.

About the body, only thing to say is to correct the upper shape to be more thin on top.
The lower metal plate of his body in the original is divided in two section- lighter / darker metal.

I have an issue with the original sprites lighting... there is no way the 'spot' on the head would be there with that shadow... or is it me?

Good start Airguitar, and welcome to the project. First off, please try to set personal interpretation of the sprite aside while doing a remastering. Concentrate on getting the basic shapes out (which you've done), and getting the coloring right. Detail work is always the last step in creating art.

For individual critiques, the blue is a harsh contrast to the sprite. Replace with black and then add shading per the guidelines. The main screw is almost twice the size it needs to be, and for shading you'll want to follow what can be seen on the original - darker shadow on the lower right side, light up the upper left. More expansion of the main shadow color on the head as well since it doesn't currently follow an outline like the sprite does. I know you didn't particularly like the highlight, but please recreate it in its original position. The connection area between the head and the base should not be a straight line down, play around with some variations of a curve there. If the general concensus is that artistic license is needed, that's the path we'll take, but only after seeing a faithful 4x remaster. Eyes and pupils, just make them more circular. No real need to comment on the tube/mouth since it's pretty obviously very early WIP.

Again for everyone looking to do art, take a look at the guidelines and remember - shape, shade, detail, in that order!

Thanks for the commments Karma. I'm working off both the the sprite and the artwork (hench the blue dome on the botton) so putting both toghther is harder than I thought... expect an update on Octo on monday.

Those numbers need to look more like they're made out of bubbles, that was the whole point to them looking like that (there's even a frame in Sonic 1 that shows the bubbles half-morphed into the numbers). The outlines need to be thinner, and the reflections less solid.

I have started to take on board what was said, and here is what I did.

there are still some outlines and stuff that need work (ie - the screw) and the legs are on just to get a feeling of completeness - I'm working on a new set of legs working more off the sprite, not the original Japanese artwork.